Saudi Fund Assets Forecast To Cross $400 Billion In 2027 Arabian Post

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Arabian Post Staff -Dubai

Saudi Arabia's asset management industry is expected to exceed $400 billion in 2027, Fitch Ratings said, as private investment funds expand and domestic demand supports growth despite volatile financial markets.

Assets under management reached approximately $370 billion during the first half of 2026, an increase of 20 per cent from a year earlier, according to the ratings agency. The industry, the largest in the Gulf Cooperation Council, now represents about 27 per cent of Saudi gross domestic product, against 23 per cent a year earlier.

Fitch identified private funds as the principal source of expansion. They accounted for 55 per cent of total managed assets after recording annual growth of 31 per cent, with investments concentrated in property and equities. Family offices also contributed to demand for privately managed investment vehicles.

The agency expects the sector to benefit from developing capital markets, regulatory changes and increased participation by overseas institutions. Its projection nevertheless remains subject to market conditions, including movements in oil prices and interest rates and continuing geopolitical uncertainty.

Bashar Al-Natoor, Fitch Ratings' global head of Islamic finance, said stronger investor demand, regulatory progress and foreign participation were supporting the industry's growth. He identified domestic investment capital, a widening range of investment opportunities and evolving rules as important foundations for further expansion.

The composition of managed assets illustrates the importance of private investment structures. Discretionary portfolio management, under which managers invest on behalf of clients according to agreed mandates, represented 27 per cent of the total. Public investment funds accounted for the remaining 18 per cent, with their assets growing 19 per cent annually.

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The latest figures indicate that growth has continued beyond the first quarter, when industry assets exceeded $340 billion. At that point, Fitch recorded annual expansion of 17 per cent and estimated that managed assets were equivalent to approximately 26 per cent of GDP.

Separate figures for the investment fund market showed assets reaching about one trillion Saudi riyals, equivalent to $266 billion, at the end of June. That represented annual growth of 28.2 per cent. The number of funds rose by 29.6 per cent to 2,249, reflecting expansion in both the scale and availability of investment products.

Foreign institutions are also taking a larger share of the business. International and regional capital market firms generated 18.5 per cent of industry revenues in the second quarter of 2026, compared with 12.5 per cent in 2024, Fitch said. Domestic managers affiliated with banks nevertheless remain influential in a market supported by established local distribution networks and investor relationships.

Foreign ownership of freely tradable shares on the Saudi Exchange's main market stood at 12 per cent at the end of October. Overseas holdings of domestic government debt increased to 14.7 per cent during the first half of 2026, compared with 4.5 per cent at the end of 2024.

Changes to market access have accompanied that expansion. Saudi authorities removed qualification requirements for direct foreign investment in the main equity market in February, broadening access for overseas investors. The Capital Market Authority subsequently proposed stricter disclosure requirements for investment funds in October, with the stated aim of improving transparency and investor protection.

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Islamic investment products remain a component of the industry. Fitch regards the domestic sukuk market and the prevalence of Shariah-compliant funds as important sources of investment opportunities for local and international managers. Sukuk are securities structured to comply with Islamic finance principles and provide an alternative to conventional interest-bearing bonds.

The credit profile of issuers is another consideration for fund managers allocating capital. Fitch said 96 per cent of Saudi Exchange entities it rates carry investment-grade ratings, with an equivalent proportion assigned stable outlooks. Almost all Saudi sukuk covered by its ratings also fall within investment-grade categories.

The agency has emphasised that asset growth does not eliminate investment risks. Changes in interest rates can affect bond valuations and portfolio returns, while oil-price fluctuations and regional security developments can influence liquidity, investor confidence and equity prices. Such pressures remain relevant even as the number of funds and participating institutions increases.

Saudi Arabia's investment industry includes privately managed portfolios, publicly offered funds and specialised vehicles holding property or shares. The distinctions matter because their assets, liquidity arrangements and investor bases differ, even when they are included within the same industry-wide measure of assets under management.

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